One thing income investors have in common is that they’re on the hunt for steady passive income. One of the easiest ways to achieve this is to invest in dividend-focused exchange-traded funds (ETFs). They are easy to buy and sell, often have low expense ratios and can offer tremendous portfolio diversification. You can give investors access to a basket of stocks while also making dependable monthly or quarterly distributions.
With hundreds of ETFs to choose from, you need to be picky — that’s particularly true if you’re in income investor. But balance is important, so a combination of the following three ETFs can offer broad-exposure, balanced safety and passive income. I’d recommend holding the Vanguard S&P 500 ETF (NYSEARCA:VOO | VOO Price Prediction) for safety and loading up on the JPMorgan Equity Premium Income ETF (NYSEARCA:JEPI) and the Vanguard High Dividend Yield Index Fund ETF (NYSEARCA:VYM) for dividend income. Top firms manage these ETFs; they carry low expense ratios and offer regular payouts.
JEPI: Income and Growth
Managed by the experts at JPMorgan, JEPI was launched in 2020 and has become a top choice of income investors. It is actively managed and uses a covered call options trading strategy to generate an attractive yield of 8.62%. It holds 126 stocks, which include both top dividend companies and growth firms. No one stock in its portfolio has a weighting higher than 2%, which reduces volatility to some extent.
The options strategy allows it to maintain a buffer in case of market downturns, while focusing on the top blue-chip companies ensures stability. With $41.35 billion in assets under management, JEPI is a top choice today. As a bonus, it pays its dividend monthly.
From a portfolio construction standpoint, its highest allocation is in the technology sector (14.9%), followed by financials (14%). Some of the top companies in the fund include NVIDIA (NASDAQ:NVDA), Amazon (NASDAQ: AMZN), Microsoft (NASDAQ:MSFT) and Mastercard (NYSE:MA).
JEPI is an ideal fund for retirement and could possibly outperform the S&P 500 this year. It has generated cumulative returns of 34.15% in three years. The ETF has a low expense ratio of 0.35% considering that it’s actively managed. Its NAV is $56.65.
While the fund isn’t as diversified as many other ETFs, such as the aforementioned VOO, it does own top-tier businesses and employs a top-tier strategy. Plus, it pays monthly dividends, allowing you to enhance your passive income over the long term. An investment of $10,000 in JEPI in May 2020 would be worth $17,920 today.
VYM: An Under-appreciated Dividend Fund
The VYM is another ETF that deserves your attention if you’re an income-oriented investor. One of the top ETFs today, VYM has an expense ratio of only 0.06%. The share price of VYM is up 9.4% year-to-date, 13.3% in 12 months and 66% over five years. It pays quarterly dividends and is a passively managed fund that tracks the performance of the FTSE High Dividend Yield Index.
The fund holds 580 stocks and has a dividend yield of 2.48%. VYM picks companies that have paid above-average dividends for the past 12 months. Its holdings include strong dividend-paying companies like Procter & Gamble (NYSE:PG), Walmart (NYSE:WMT) and JPMorgan Chase (NYSE:JPM).
With over 500 stocks in the portfolio, you enjoy ultimate diversification at low risk. No stock has a weightage higher than 7%. The fund has the highest allocation in financials (21.60%), followed by industrials (13.60%) and technology (12.30%).
Overall, it offers a strong yield and pairs well with JEPI for steady income and multi-sector diversification. A few holdings may overlap with JEPI, but you’ll get passive income from both the ETFs.
VYM is a growth ETF and has delivered 116.27% over 10 years. Driven by its exposure to financials and industrials, I expect the fund to outperform the market in the coming years.
VOO: Safety and Stability
The VOO tracks the S&P 500 index and offers diversified exposure to the top 500 U.S. companies across different sectors. VOO has an expense ratio of 0.03% and has soared in 2025 as the S&P 500 hit a new all-time high. It is the largest ETF in the world by assets under management.
There are several reasons to buy VOO for safety. First, it is a highly diversified fund that holds 504 companies, meaning you have broad exposure which, in turn, can reduce volatility. Second, it invests heavily in technology (34.10%), followed by financials (13.60%) and consumer discretionary (10.40%). The top 10 holdings include the Magnificent Seven, but it also has a few dividend stalwarts.
With VOO, you’ll also find giants like Apple (NASDAQ:AAPL), Coca-Cola (NYSE:KO), ExxonMobil (NYSE:XOM) and Home Depot (NYSE:HD). It holds several familiar businesses across different categories, from technology to consumer staples and energy. The ETF has an expense ratio of 0.03%, making it one of the least expensive funds in the space.
Besides ultimate diversification, VOO generates impressive returns. The share price of VOO rose by 10% year-to-date, 19% in 12 months and an impressive 88% in five years. VOO pays quarterly dividends and has a yield of 1.16%.
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